Whole Foods Market spiked at the top of a euphoric high

As the price of Whole Foods Market, Inc. (NASDAQ:WFM) spiked from yesterday’s close of $37.77 to trade at $40.40 at the top of a euphoric high, the stock sold off as Yahoo reporter Kevin Chupka dampened hopes of bulls.

The rumor was first reported on theflyonthewall.com, but it received legs when Doug Kass, the president of Seabreeze Partners Management, reported on Twitter that he was “hearing” Icahn might have taken an interest in the stock.

Whole Foods Market’s fundamental trends appear negative

Fundamental trends in the stock appear negative, as earnings have disappointed for the past three reporting periods. But the fundamental story is already in the news – meaning the trade opportunity has vanished. You’re too late. The question going forward is: has the blood on the street played itself out in this stock?

Looking at the stock on a longer term basis, managed futures trend followers might be logically expected to have received a sell signal on the stock towards the end of 2013 when the stock was trading near $55. Based on five specific momentum indicators, however, the selling may be coming to an end but a buy signal on a long term basis has not been issued yet. Having said that, short term trend followers might have taken interest in the stock, as a common momentum indicator turned positive days ago. Each trend following program uses its own algorithms to trade, many of which are very different and not based on simple moving averages. The core concept behind many of the trading algorithms, however, is to detect sustainable price patterns that will continue into the future. The strategy has approximately just over a 50 percent win percentage, but the key to success in this strategy is often found in the win size versus loss size.

At this point it appears only the most aggressive algorithmic traders have accepted risk exposure to the stock, while the fundamental guys appear to have little interest.